The 10 Worst Dow Stocks of 2011

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It's been a wild year in the markets. Between August and November, the Dow Jones (INDEX: ^DJI) swung by an average of 269 points a day! That's an incredible level of volatility, and at times it felt like the financial world was once again teetering on the edge.

However, as the year closes, optimism has returned. After rallying throughout the latter half of October and overcoming a late November plunge, the Dow has returned 5.6% for the year, significantly outpacing other indexes like the small-cap oriented Russell 2000.

However, while blue-chip stocks in general have done very well, not every stock on the Dow is closing out 2011 in a celebratory mood. Following are the 10 worst-performing Dow stocks on the year.

Company

Percent Return (Year to Date)

Bank of America (NYS: BAC) (58.3)
Alcoa(43.7)
Hewlett-Packard (NYS: HPQ) (38.8)
JPMorgan Chase (NYS: JPM) (21.6)
Cisco Systems (NAS: CSCO) (10.6)
DuPont(8.2)
Microsoft (NAS: MSFT) (6.9)
United Technologies(7.1)
3M(5.3)
Caterpillar(3.3)

Source: S&P Capital IQ. Returns are not adjusted for dividends.

Here's a quick rundown of some common themes.

Banking on the edge
First, banking stunk, which shouldn't surprise many investors. The major fear is that sovereign-debt defaults in Europe could unleash a wave of failures across the banking system, bringing the world's financial system once again to its knees. Those fears have overridden positives like wide interest-rate spreads. For banking, the picture doesn't look much better in 2012.

Big losers in technology
Hewlett-Packard, Cisco, and Microsoft all make the list of worst performers. As evidenced by the Nasdaq's underperformance relative to the Dow in 2011, it's not surprising to see some technology companies near the bottom of the Dow. However, it's also worth noting that IBM was among the Dow's top performers this year and Intel was an index top-10 performer as well. More to the point, Apple (NAS: AAPL) , a company that won't be on the Dow any time soon because of its sky-high share price but is the largest technology company, managed to handily stomp the market by returning 25% this year.

The point? Blue-chip technology companies didn't take it on the chin as much as this list might indicate. The problem with companies like HP and Cisco has been poor execution and mismanagement that led them into ill-conceived new product categories.

A tough time in industrials
One final area to look at is companies with industrial end-markets seeing their share prices hurt. Alcoa continues seeing difficult aluminum pricing conditions, while DuPont and 3M have been hurt by perceived weakness in their industrial end-markets.

In all, it was a solid year for the Dow. However, if you're on the hunt for more great stock ideas headed into 2012 beyond what the Dow has to offer, The Motley Fool has created a brand-new free report: "The Motley Fool's Top Stock for 2012." It features a company hand-selected by the Fool's chief investment officer that has a strong future ahead of it. I invite you to take a copy, free for a limited time. Get access to the report and find out the name of this legendary company.

At the time this article was published Eric Bleeker owns shares of Cisco. The Motley Fool owns shares of Bank of America, Apple, Microsoft, IBM, Intel, JPMorgan Chase, and Cisco Systems, has bought calls on Intel, and has created a bull call spread position on Cisco Systems.Motley Fool newsletter serviceshave recommended buying shares of Apple, Cisco Systems, 3M, Microsoft, and Intel, creating a diagonal call position in 3M, and creating bull call spread positions in Microsoft, Apple, and Intel. Try any of our Foolish newsletter servicesfree for 30 days. We Fools don't all hold the same opinions, but we all believe thatconsidering a diverse range of insightsmakes us better investors. The Motley Fool has adisclosure policy.

Copyright © 1995 - 2011 The Motley Fool, LLC. All rights reserved. The Motley Fool has a disclosure policy.

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